Economist urges boost in credit facilities for SMEs

The government has been asked to bolster affordable credit facilities for Small and Medium Enterprises (SMEs) in the wake of easing inflation in the country.

Economic analyst Misheck Essau has made the remarks in response to the Market Intelligence Report for February 2024 recently released by the Reserve Bank of Malawi.

The report is indicating a slight decline in headline inflation to 33.5 percent from 35.0 percent in February 2024, offering a glimmer of hope amidst ongoing economic challenges.

According to Essau, while the drop in inflation is noteworthy, it is not substantial enough to generate a significant impact.

“There is a lot of work for us to do for inflation to reach single digits, just as the situation is in other countries that have managed the same,” he emphasized, highlighting the persistent challenges facing Malawi’s economy.

The economist also pointed out that consumer purchasing power was severely affected by a 44% devaluation of the Kwacha last year, leading to skyrocketing of prices as well as food scarcity.

Although some regions are expected to see improved harvests following recent droughts, overall, economic recovery remains a gradual process.

Essau, therefore, cited revitalization of the agriculture sector and ensuring that SMEs have access to more affordable financing as important keys to country’s economic recovery.

“Interest rates are still high and there must be measures in place to increase access to finance for SMEs,” he added.

Recent data released by the International Food Policy Research Institute (IFPRI) indicates a decline in maize retail prices by 12.0% to K771 per kilogram from K991 per kilogram in January, attributing to increased sales at ADMARC depots in February.

Despite a slight depreciation of the Malawi Kwacha against the US dollar, with a 0.2% decline recorded in February, retail pump prices for petrol and diesel remained unchanged, according to the Malawi Energy Regulatory Authority (MERA).